Thomas Cook aims to reduce debts by shutting 200 UK stores

Wednesday, 14 December 2011 09:34

Thomas Cook has announced that it will close 200 stores in the UK during the next two years as part of a plan to ensure that the business continues to operate.

Thomas Cook has been adversely affected by a decline in sales, partly influenced by events in key holiday destinations such as the floods in Thailand and the uprisings in Egypt and Tunisia. The company has also been adversely affected by the increase in holiday bookings through the internet.

Plans were already announced to shut 75 stores but the company has decided that it needs to increase this number to 200 in a move that will see the loss of 661 jobs.

Thomas Cook has reported a loss of £398 million in the trading year up to the end of September 2011 and last month had to secure £200 million of new emergency bank funding after its shares fell by 75 per cent in just one day and have fallen by around 90 per cent since March.

Part of the reported loss of £398 million came from the company having to account for exceptional charges of £573 million that affected its UK and Canadian businesses.

The emergency funding secured from banks such as HSBC, Barclays and RBS will last for 18 months up until the end of April 2013 and the company will aim to improve investor confidence by cutting its levels of debt, which it hopes will see an increase in its share price.

The company will still have 1.300 retail outlets in the UK and the changes to the UK business aim to improve overall profits by £110 million a year. Yesterday, Thomas Cook sold its Spanish hotel chain, Hotels Y Clubs De Vacaciones to Grupo Iberostar for €72.2 million as part of its debt reduction strategy.

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